CAS EC 101 Lecture : EC101 Oct28

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Neil Watson

Document Summary

Econ october 28, 2013: capital supply, budget constraints, capital supply curve, capital demand, marginal product, marginal revenue product, the supply of capital, physical capital= machines, factories, office buildings, etc, savings (cid:224) financial capital (cid:224) physical capital, savings= capital supply, physical capital = capital demand, capital budget constraint, c1 is consumption during the first period, when you are working and saving money, c2 is consumption during second period, when you are living off money saved during the first period, the amount that you can consume in a given period is constrained by your income, horizontal intercept: i1 = income period 1, =,000, r= interest rate, =10% vi. then ,000 is maximum to consume during period 2, slope of budget constraint, negative of 1+ interest rate, slope = px/py, slope is always 1 plus interest rate, the horizontal intercept doesn"t change, deriving the capital supply curve.